UK shipyard Cammell Laird has given its version of the events that led to Wednesday's decision to call in the receivers.

In a statement, the Mersyside shipbuilder said its decision followed a series of problems that caused significant
damage to its trading and financial position.

In Autumn 2000, the ship builder and repair yard had a record level of enquiries totalling
approximately £750m which gave the directors high confidence in the future
prospects of the group.

The business had grown substantially reporting pre-tax
profits to April 2000 of £15.9m.

Investment was made in employees and infrastructure in anticipation of further growth.
But the enquiries did not translate into firm orders, the company said.

Government contracts

In late October, a six ship contract for the Ministry of Defence was awarded to the German
shipyard, Flensburger, and Harland and Wolff.

The company claims a further naval order for four
large landing craft could not be pursued with any prospect of success due to the Government's bidding process.

The work was awarded to BAE Systems and Swan
Hunter, with the result, Cammell Laird claims, that its shipyards were the only major
facilities in the country not to benefit from Government orders.

Italian cruise ship

But the biggest impact on the deterioration in Cammell Laird's position was the dispute over the Italian cruise-liner Costa Classica.

The contract involved a £50m
lengthening of a cruise ship.

Signed in late summer of 1999, the work involved
building a mid-body section for insertion into the vessel between November
2000 and March 2001.

Given the credit worthiness of Costa Crociere, Cammell Laird's confidence in its
own technical ability, and the desire to further establish itself in the
important cruise ship market, the British company says it agreed to accept a contract with back
end payments.

However, the ship's operator, Costa Coriciere, pulled the plug on the order as the ship was sailing to Cammell Laird's yard.

Cammell said it had considered legal action against Costa Coriciere, but has been advised it would take two years for a case to be resolved.

Damaging

Cammell says the Costa dispute has been very damaging to its business.

Apart from the loss of profit on the contract and significant cash
outflow, the company says it has suffered the additional costs of downsizing the
workforce, carrying excess overhead costs and the significant negative impact
on employee morale.

During the period since November, Cammell Laird has also been working hard to secure a $500m contract to build two luxury cruise ships for Luxus (UK) Limited.

It has made strenuous efforts to improve the government's offer of support to Luxus, it says.

Various assessments were made of Cammell Laird's
capability and project plan which all stood up to scrutiny.

However, to date, the company claims the support package has not been sufficiently improved to enable the project to proceed.

The impact of all of the above, the company claims, has created an environment of lower customer
confidence and employee morale leading to less work at tighter margins.

The directors had embarked upon a strategy of re-organisation and re-focussing of
the business which included a possible restructuring of the balance sheet and
possible sale of the business as a going concern.

However, the company now has
insufficient working capital to complete this strategy and accordingly has
taken the action announced on Tuesday.

The company's directors say they will continue to provide whatever assistance they can to the receivers to protect the future prospects of the business and
safeguard jobs.